Best Software Options for Processing Form 1065

Filing Form 1065, the U.S. Return of Partnership Income, is essential for partnerships to report financial activity to the IRS. Choosing the right tax software enhances accuracy, ensures compliance, and streamlines the process while reducing errors that could lead to penalties.

With various options available, selecting the best software depends on factors like ease of use, integration with accounting tools, and cost-effectiveness.

Key Features to Look for in Form 1065 Software

A well-designed Form 1065 software simplifies tax preparation and ensures compliance with IRS regulations. Automated data entry and validation reduce manual errors, while integration with bookkeeping platforms like QuickBooks or Xero allows direct financial data imports, minimizing discrepancies. Built-in error-checking mechanisms flag inconsistencies before submission, reducing the risk of rejection or audit triggers.

Efficient Schedule K-1 generation is another key feature. Partnerships must provide each partner with a K-1 detailing their share of income, deductions, and credits. Software that automates this process improves accuracy and ensures timely distribution. Some platforms also offer electronic K-1 delivery, reducing paperwork and improving communication with partners.

Tax law updates and compliance monitoring are critical. The IRS frequently revises tax codes, and software that incorporates real-time updates ensures filings reflect the latest regulations. For example, changes under the Bipartisan Budget Act of 2015 require software to support centralized partnership audit rules, including the ability to elect out when eligible.

Top Software Options for Processing Form 1065

Different tax software platforms cater to varying needs, from professionals managing multiple clients to business owners handling their own filings. The best options balance usability, compliance support, and reporting capabilities.

Thomson Reuters UltraTax CS is a top choice for tax professionals due to its advanced partnership tax features. It offers robust reporting tools to track partner capital accounts and tax-basis capital reporting. The software supports multi-state filings, making it useful for partnerships operating in multiple jurisdictions. Integration with other Thomson Reuters products, such as Fixed Assets CS, allows for seamless depreciation and asset tracking—especially valuable for partnerships with real estate holdings or significant capital assets.

Drake Tax is known for efficiency and ease of use. It provides built-in diagnostics that flag compliance issues before submission and includes batch processing capabilities to help tax firms manage multiple partnership filings. The software supports e-filing and generates necessary state returns, making it a practical choice for tax preparers looking to streamline their workflow.

TaxAct Professional offers a user-friendly interface with a guided workflow that simplifies Form 1065 preparation. It includes depreciation calculators and a partnership allocation module, helping distribute income, deductions, and credits among partners based on ownership percentages. This makes it a good fit for smaller partnerships without dedicated accounting teams.

Comparison of Software Pricing and Plans

Pricing varies based on features, support, and whether the software is designed for businesses or tax professionals handling multiple clients. Some platforms use a pay-per-return model, while others require an annual subscription with unlimited filings.

Thomson Reuters UltraTax CS is a high-end option, often exceeding $3,000 per year for a full suite that includes Form 1065 preparation. The cost reflects its extensive compliance tools, integration capabilities, and multi-state filing support. Lower-tier plans charge per-return fees, which can add up for firms handling numerous partnerships.

Drake Tax offers a more affordable alternative, with pricing starting around $1,800 for an unlimited filing package. It also provides a pay-per-return option at approximately $50 per Form 1065 filing, making it suitable for smaller firms or businesses with limited filing needs.

TaxAct Professional is the most budget-friendly option, with prices beginning at roughly $150 per federal return. While it lacks some advanced features, it remains a viable choice for small partnerships or independent tax preparers. State return filings cost an additional $50 per state, which should be factored in for partnerships operating in multiple jurisdictions.

User Reviews and Ratings of Form 1065 Software

User feedback highlights differences in usability, customer support, and reliability. Many tax professionals emphasize the importance of responsive vendor assistance, especially during peak filing periods.

UltraTax CS receives positive reviews for its dedicated support team, which provides technical guidance on complex partnership tax scenarios. However, some users note that response times can slow during busy months.

Drake Tax is praised for its stability and processing speed, particularly when handling large data sets. However, some users find its interface outdated and less intuitive, leading to a learning curve for those unfamiliar with its workflow.

TaxAct Professional receives mixed reviews. Small business owners appreciate its affordability, but some report occasional software glitches. A common complaint involves form population issues, where certain entries do not always carry over correctly between schedules, requiring manual adjustments.

Choosing the right Form 1065 software depends on the complexity of the partnership’s tax situation, budget, and the level of support needed. Tax professionals managing multiple clients may find UltraTax CS or Drake Tax more suitable, while smaller partnerships may prefer the affordability and simplicity of TaxAct Professional.